The foreign exchange market (Forex) is often compared to a scene from a Hollywood action flick, complete with its high-octane atmosphere, quick-paced trading, and enormous financial rewards. It’s human nature to want to find a Forex trading method that has a high success rate and a high transaction volume. As much fun as it may be to trade with a system that trades regularly, you should be aware that this trading may be eating away at your gains by the thousands. By the conclusion of this essay, you’ll know why less is frequently more when it comes to trading using automated Forex systems.
Failure of Scalping Forex Trading systems
In reality, if you’re doing it well, trading is one of the most boring things you can do. Take a deal with the expectation that it would be profitable, but without any actual idea of its likely outcome, and you have yourself some excitement and enjoyment. That’s not trading; it’s gambling, in my book. You know roughly what to expect from your automated Forex trading system over the long haul, and real trading is conducted in a businesslike manner, with automated systems in place to collect pips from the market.
However, the excitement of Forex trading cannot be fully removed, even with the help of automated trading systems. Unconsciously, you’re giving in to that craving for a thrill when you choose for a method that trades often and promises a high proportion of wins. After all, it is human nature to desire success, and particularly great success. Scalping Forex Trading Systems are a subset of this larger category that focus on making several profitable transactions quickly.
Scalping As much as 100 times per day is not uncommon for Forex trading systems. They usually just stay in the market for an hour or less, but their goal is to make 5-10 pips every trade. What Forex traders love is when there is a lot of turnover since it leads to a series of many lucrative deals. However, when it loses (and it loses frequently), it can lose 100 pips or more. Therefore, even if you have a perfect record of 10 wins and no losses, your account might still end up with a negative balance of -10 pips.
Less Is More When Trading Forex
The spread you pay to your Forex broker will be higher if your automated Forex trading system trades more frequently than if you used a system that traded less frequently. With a system that trades regularly, you’ll be giving your Forex broker all the money you make. The spread expenses mount up to thousands of dollars over time. The less often it trades, the less money it loses to spread charges, which means more money in your pocket when using an automated Forex trading system.
Look for automated Forex trading systems that trade less frequently yet attempt to make more gains from each trade. Even if your win rate will drop, you should see an increase in your average profit and decrease in your average loss. That means your ROI will be far more consistent and you won’t have to worry about losing days’ worth of gains on a single deal. For this reason, if you’re looking for an automated trading solution that consistently delivers positive returns, you should look elsewhere than Scalping Forex Trading Systems.